Sobering article about endowments

george_jetson

Just stumbled across this article about endowments on the BBC website.

http://news.bbc.co.uk/1/hi/business/7823849.stm

This in particular made me raise my eyebrows!

Interestingly, according to figures from Money Management magazine, Friends Provident endowment investors would actually have been better off surrendering their endowments after 24 years in 2007, rather than seeing them through to maturity in 2008.

:eek:

"Interestingly"!

I maintain that the best financial decision I made was getting shot of my endowment policy in Jan last year - talk about dodging a bullet. Any my worst financial decision? Taking the :mad: thing out in the first place!

ukcarper

I think your right 4 or 5 years ago I got some quotes to sell my endowment which I didn’t take, then about 2yrs ago I got a revised offer. As the policy only had a couple of years to run even though it wasn't far off the target amount thinking the endowment buying company knew something I didn’t, I didn't sell. Now 2 years later it’s maturing with pay out not much bigger than the offer so considering the extra interest and premiums I have paid I regret not taking it (hindsight is a wonderful thing).

Gorgeous_George

The nearer to maturity a policy is, the less likely it will improve.

I'm happy that I canned my Standard Life policy last year. I expect more cuts to be announced on Monday but I hope I'm wrong for all those who still hold these dummies.

EDIT: Already announced. (Link)

GG

foreversummer

My Standard Life endowment would have matured in April this year. Thankfully I sold it five years ago and got what I considered to be a reasonable return at the time.

Looking at the figures I don't think I would have got much more if I left it to maturity.

Foreversummer

george_jetson

The article shook me because I always thought the the terminal bonus meant that endowments were worth hanging on to if they only had a few years left to run. Seems that's not the case!

Like many I cashed in early and stopped throwing good money after bad. I'd love to be able to go back in time 12 years ago and stop myself from signing on the dotted line when I was being sold the thing…

Gorgeous_George

foreversummer wrote: »

My Standard Life endowment would have matured in April this year. Thankfully I sold it five years ago and got what I considered to be a reasonable return at the time.

Looking at the figures I don't think I would have got much more if I left it to maturity.

Foreversummer

Well done. I think that you timed it just right (probably by chance?).

george_jetson wrote: »

The article shook me because I always thought the the terminal bonus meant that endowments were worth hanging on to if they only had a few years left to run. Seems that's not the case!

Popular misconception with many policies. The 'sum assured' is supposedly guaranteed but I think Equitable Life proved this wasn't the case either.

george_jetson wrote: »

Like many I cashed in early and stopped throwing good money after bad. I'd love to be able to go back in time 12 years ago and stop myself from signing on the dotted line when I was being sold the thing…

Hindsight is alway 20/20. At the time they were seen to be a good investment - just as houses were 3 years ago.

GG

handful

This is very worrying. I have 3 Scottish Life policies and 1 Norwich Union all due to mature between 2010 and 2011. Even if I were to get surrender values now, how would I know what to compare it against for future values? I know they aren't going to pay out what they should (apart from maybe the Norwich Union one which is supposed to have some kind of guarantee although I'm not banking on it) but I really don't want to lose out even more by hanging on to them til maturity. What a nightmare.

EdInvestor

Post some info about the endowments for a comparison.(start a new thread)

Guaranteed sum assured
Declared bonuses
Surrender value
Monthly premium
Maturity date
Maturity forecasts
interest rate payable on mortgage

handful

Thanks EdInvestor I will get surrender values next week and post details.:beer:

foreversummer

Gorgeous_George wrote: »

Well done. I think that you timed it just right (probably by chance?).
GG

Certainly it was one hell of a decision at the time and one that I have often fretted about since. I just got lucky on this occasion I guess. I got rid of two other smaller ones shortly after and paid down the mortgage. Certainly no regrets now.

Foreversummer

ukcarper

My Norwich Union endowment is just about to pay out £23,500 instead of the target amount of £25000. It was on target to meet the £25000 at 4% at the beginning of last year. I also have another Norwich union Policy for £20,000 which is due to pay out next year, which wasn’t on target even though the promise applies. I am not anticipating anywhere near the £20,000 and even though I have paid of £5,000 of the original£45,000 mortgage I'm beginning to wonder if I will get enough to cover the remainder.